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The Ellsberg paradox: A challenge to quantum decision theory?

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  • Ali al-Nowaihi

    ()

  • Sanjit Dhami

    ()

Abstract

We set up a simple quantum decision model of the Ellsberg paradox. We find that the matching probabilities that our model predict are in good agreement with those empirically measured by Dimmock et al. (2015). Our derivation is parameter free. It only depends on quantum probability theory in conjunction with the heuristic of insufficient reason. We suggest that much of what is normally attributed to probability weighting might actually be due to quantum probability.

Suggested Citation

  • Ali al-Nowaihi & Sanjit Dhami, 2016. "The Ellsberg paradox: A challenge to quantum decision theory?," Discussion Papers in Economics 16/08, Department of Economics, University of Leicester.
  • Handle: RePEc:lec:leecon:16/08
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    File URL: http://www.le.ac.uk/economics/research/repec/lec/leecon/dp16-08.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Quantum probability; Ellsberg paradox; probability weighting; matching probabilities; projective expected utility; projective prospect theory;

    JEL classification:

    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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